SHPS-1 (SH2-domain bearing protein tyrosine phosphatase (SMP) substrate-1), a member of the inhibitory-receptor superfamily that is abundantly expressed in macrophages and neural tissue, appears to regulate intracellular signaling events downstream of receptor protein-tyrosine kinases and integrin-extracellular matrix molecule interactions. To investigate the function of SHPS-1 in a hematopoietic cell line, SHPS-1 was expressed in Ba/F3 cells, an IL-3-dependent pro-B-cell line that lacks endogenous SHPS-1 protein. Interestingly, expression of either SHPS-1, or a mutant lacking the intracellular domain of SHPS-1 (Delta CT SHPS-1), resulted in the rapid formation of macroscopic Ba/F3 cell aggregates. As the integrin-associated protein/CD47 was shown to be a SHPS-1 ligand in neural cells, we investigated whether CD47 played a role in the aggregation of SHPS-1-expressing Ba/F3 cells, In support of this idea, aggregate formation was inhibited by an anti-CD37 Ab, Furthermore, erythrocytes from control, but not from CD47-deficient mice, were able to form rosettes on SHPS-1-expressing Ba/F3 cells. Because erythrocytes do not express integrins, this result suggested that SHPS-1-CD47 interactions can take place in the absence of a CD47-integrin association, We also present evidence that the amino-terminal Ig domain of SHPS-1 mediates the interaction with CD47. Although SHPS-1-CD47 binding likely triggers bidirectional intracellular signaling processes, these results demonstrate that this interaction can also mediate cell-cell adhesion.